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February 12, 2014

Keeping ahead of the game: Interview with Phil Spencer

Keeping ahead of the game: Interview with Phil Spencer

Property guru Phil Spencer certainly knows his stuff

Property guru Phil Spencer has been offering us expert advice on getting ahead in the property industry for many years now – with hit TV series' such as Location Location Location and Phil Spencer Secret Agent, this man certainly knows his stuff when it comes to buying, selling or just having a nosey round the market! Find out about the exciting new projects he's got up his sleeve, and what he thinks is the secret behind his career success.

What is the property market in the UK looking like at the moment? Is it strong?

The market in the UK is always very polarised, meaning that different regions, areas and even different price brackets can behave independently from one another; it’s very easy to get confused. Headlines in the media about UK house prices can be very misleading because they are usually a mass average figure. In reality, what’s happening to two bedroom flats in Fulham may well have no bearing on what’s happening to five bedroom houses in Wandsworth. What is relevant to people who are looking to buy or sell their property is local market knowledge. Generally speaking though, the market is strong and there’s much more confidence in it now than there has been, even since the beginning of this year. People are feeling better about the economy and the mortgage market is improving.

Is it still worth it to try and get on the property ladder? Or is it better to rent these days?

I’m very much a fan of trying to get on the property ladder and controlling your own environment. You want to be able to make decisions on what you do with the property you live in – it’s your home, and that’s a very special place. Buying your first ‘piece of England’ is a very big moment in life, so why wait? Get on with it – as long as you can raise the deposit!

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What should people look for in their first property?

Your first-time home is not forever but financially speaking, the longer you can live in the property the better off you’ll be in the long term, simply because of the costs of buying and selling, such as stamp duty; the less times you move the better. So bear this in mind when buying your first property. Be clever about what you buy so you can aim to stay there for a while. Think how your life might change in coming years. Buy somewhere that’s flexible and can evolve as your needs of it evolve. For example, a spare room is always great to have – it can initially be used as an office or games room, but can easily be converted into a nursery in the future.

Is it a good idea to buy a property you can develop?

Anything you can do to add value to a property is a good thing. So if you invest in a something with the potential to be made bigger in some way, that should stand you in good stead for when you sell it. Remember, every property has a ceiling price – don’t put more money into the property than you can hope to get back from it.

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What are your thoughts on the government scheme to help first time buyers?

There are two parts to the scheme. It was initially set up to help the construction industry (to provide new growth on the market as well as jobs and so forth), and at first the scheme only applied to those wanting to buy ‘new build’ properties. It’s worth bearing that in mind because it originated from a business perspective, not from a consumer perspective. Now it’s been rolled out to older properties. I do support anything that will help the property market – what helps first-time buyers inevitably helps everybody else because if you don’thave first-time buyers at the bottom of the ladder, nobody else can hope to move on. But we need to be mindful of when the scheme ends in a few months time as it’ll have a big impact on prices. The problem with the scheme is that its short time spanencourages a ‘peaks and troughs’ type of movement to the market (sharp bursts in small timeframes), but what we really need is a bit of consolidation and stability.

What are the best organisations that can help advise when buying a property?

It depends what you’re trying to find out – if you’re trying to look for local market information then the RICS (Royal Institute of Chartered Surveyors) have a very good website. Several of the big estate agents have research departments too. TheCouncil of Mortgage Lenders is another organisation that can offer some helpful information, as can the Land Registry. Then there are property ‘portals’ such as Zoopla, and all of those sorts of websiteshave online Q&A articles that offer helpful information on the property market. It
really just depends on what you’re looking for. There is an Association of Relocation Professionals (ARP). I was involved with them earlier in my career, and they are an organisation of ‘buying’ agents who look after buyers (as opposed to estate agents
who are employed by, and have a vested interest in, the ‘seller’).

What do you think about the importance of organisations such as the NHBC (National House- Building Council) who help to set the standards for new and newly converted homes across the UK? What are the benefits?

They set industry standards. If you look back to past decades such as the ‘70s and ‘80s, regulations were not as well monitored as they are today and architectural standards weren’t as good as they should have been. I remember blocks of flats put up in the mid-80s property boom very cheaply, and they were very poorly built; 30 years on, no one really wants to buy them, and this shouldn’t happen because once they’re built we have to live with them! So organisations that ensure industry standards are constantly challenged and pushed are absolutely fantastic. We’ve got a far better building industry now than ever before because of them.

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What should you look for when viewing a property to ensure it keeps its value long-term?

Look for local improvements to the area, either in the form of transport, shopping areas, gyms, cinemas, new pubs etc. If money is being invested in those areas it’s a good possibility the local property market will pick up in that area too. Also, look out for new blocks of flats or big property developments being built – the big house builders will have researched demographics for the area and if they think it’s worth putting a few million into a building project, then rest assured they’ve done their sums and you can be confident that it’s an area worth investing in.

What is your advice for someone thinking of buying a property at auction?

Don’t expect to get a ‘deal’, they don’t exist anymore. However, there’s a better choice of property at auction now than there has been in the past – it used to be flats above shops or repossessed buildings that were available through auction, but it’s not like
that anymore. You can find perfectly good family houses to buy at auction these days. It’s a very ‘immediate’ process, you exchange contracts there and then, and put down your 10 per cent etc. In other countries buying property at auction is
very common, for example in Melbourne, Australia, about 95 per cent of property is bought and sold in this way. It’s good because it’s a very transparent process, and very quick.

What about buy-to-rent? Is that a good option? What are the benefits/pitfalls?

It’s all about the maths, and needs to be a completely unemotional decision. When buying, don’t let yourself be swayed by whether or not you like it from a personal perspective – you don’t need to like it. I think some people struggle with that. Also, don’t forget that a return on a property comes in two forms: one is your annual yield (which you’ll gain from the property through rent charges) and the other is capital growth; your preference on this will have an impact on what you buy. Also, make sure you take hidden expenses into account, such as loss of earnings if the property lies vacant for a period of time – if you don’t have a tenant in the property for a month every year, it might turn what could have been a good investment into a really terrible one. Think very carefully about your target tenant (all will have very different requirements), pick one that suits you and choose a property to suit them.

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What’s it like to work with Kirstie – are you as competitive as it appears in the show?

We both want to do well and also help our buyers in the show, so if we’re individually successful it’s easy to show off about it! But we do also like to help each other out when things get challenging. Overall it’s a lot of fun working with Kirstie – we’ve done 16
series altogether, and I don’t think we’d have lasted this long if it wasn’t really good fun.

That’s a long time to have worked on one show – what most interests you about it?

It’s a very satisfying thing to help somebody find their perfect property. To meet someone who tells you about the property they’ve been dreaming of, and all the features they’d love it to have, and then being able to deliver that to them and see
their eyes light up. I’ll never tire of that, it’s a great buzz. And then, if you can save them money on top of it, by doing a deal on the property that they wouldn’t have done on their own, that’s the ultimate goal.

Did you always fancy the idea of being a TV presenter?

No. When Location Location Location was in its preliminary stages of planning, I was originally called in as a consultant to discuss the show’s format, not to present it at all. They basically just told me that they wanted to make a show on the ‘thrills and spills’ of people buying property, but that they didn’t know anything about it and could I advise. They also met with Kirstie and one other candidate who were both contacted in the same way. Then it turned out they couldn’t find a presenter who knew anything about property, and so the
opportunity came about for a screen-test, and that’s when Kirsty and I actually met for the first time.

Is it hard for you to find people to take part in the shows you work on?

No not really, mainly because they get a lot out of it. Particularly on Location Location Location – I remember a particular series where, out of 12 episodes, we put in ten offers. Not all of those became deals, but most of them did, I think about eight
in the end. So it was quite a successful series - our success rate is probably about 85 per cent, but it’s down to an awful lot of research. 

Do you get annoyed with people when they don’t like the properties you’ve found for them?

Not at all. It’s their money, and ultimately their choice. Of course it can be frustrating when Kirstie and I genuinely think we’ve found someone their perfect house and they don’t see it that way, but I don’t let it get to me because it is ultimately their
money we’re spending.

You’re so passionate about the property market – what drives you?

We all need to live somewhere, and when we want to buy something new, most of us want something either bigger, better or different to what we currently have. The search for this can be such an emotional experience, and very rarely straightforward.
It’s very unusual for someone we work with to view a property we find them and say: “That’s it! That’s 100 per cent what I’ve been looking for!” It’s almost always a mixed response, where people weigh up their options between viewings before making a
decision. So it’s never straightforward, and often very personal – to be at such close quarters with someone going through that process is, for me, a privilege. I also love how every search is different, and piecing together the jigsaw of requirements for
each individual buyer is a challenge that fascinates me.